Tech Companies And Their Love Affair With NSA and CIA

Keyhole Inc., a venture-capital funded startup, was acquired by Google in 2004. Its product became Google Earth. Its technology filtered into Google Maps and Google Mobile. One of the venture-capital investors? The CIA. It didn’t ruffle any feathers at the time. But now we have NSA leaker Edward Snowden and his media blitz.

Bureaucrats and politicians from all sides explained to us with the patience of the exasperated that the NSA’s surveillance programs Snowden had leaked were for our own good, that they’d prevented over 50 “potential terrorist events” since 9/11, etc. etc. President Obama, while in Berlin, assured Chancellor Merkel and her countrymen that these spy programs had performed miracles in their country, and she too expressed her support for them.

Surveillance of billions of people around the world, grabbing their data, all their data, every last bit, where they went to dinner, who they met there, what they ate, and who they ended up spending the night with – if both have a smartphone – is hard work. But it’s the bread and butter of an entire US industry, a vibrant one that is hiring and creating jobs, with lots of startups, and with companies like Google and Facebook that are loaded with money and can buy some of these startups for eye-popping amounts, in cool laid-back places like San Francisco and Silicon Valley, or in Boston, or anywhere.

These companies are developing technologies to grab more data, make sense of it, combine it, analyze it, “mine” it, and monetize it. Because in the end, data is money. People who aren’t psychotically careful about communications and internet activities, or people who have a smartphone, no longer have any privacy. Instead, their privacy has been transferred to a new asset class that is now swelling up corporate balance sheets [here is my tongue-in-cheek take…. Google Spy Drones For Street View?]

What shook up America (briefly) wasn’t that Big Data knows everything about our lives – we seem to have accepted that – but that the government is getting bits and pieces of it to ferret out the occasional bad guy or use it for undisclosed purposes. Some companies claim to have handed over some of this data only reluctantly. But corporate America and the Intelligence Community have always had a productive relationship. Feeding on the big trough of government is a profitable business. According to the New York Times, unnamed “independent analysts say” that the NSA alone plows $8 billion to $10 billion a year into its Silicon Valley activities. And the CIA even has its own venture capital firm, In-Q-Tel.

Based on the priorities of its “customers,” primarily the CIA, IQT co-invests with private-sector VC firms in startups with “commercially-focused technologies that will provide strong, near-term advantages (within 36 months) to the IC mission.” It’s not shy about its purpose:

IQT was created to bridge the gap between the technology needs of the U.S. Intelligence Community (IC) and new advances in commercial technology. With limited insight into fast-moving private sector innovation, the IC needed a way to find emerging companies, and, more importantly, to work with them.

So, Pure Storage, which develops all-flash enterprise data storage systems, announced in May the closing of “a strategic investment and technology development agreement” with IQT. That’s what these agreements are: two-way streets. IQT funds the company, and the company shares its technologies.

On June 5, Narrative Science announced an investment by IQT. “Narrative Science’s Artificial Intelligence platform analyzes data and communicates this information in a way that is easy to read and understand,” it quoted IQT Managing Partner Steve Bowsher as saying. “We believe these advanced analytic capabilities can be of great value to our customers in the Intelligence Community.”

GIGAOM had a grabby headline for it: “The CIA takes an interest in Narrative Science’s quick summaries of big data,” then explained what the company really did: “take heaps of data about, say, a sports game, a company’s quarterly earnings or a person’s life and surface the most important stuff.”

Since its founding in 1999, IQT has invested in hundreds of companies, many of which have succeeded and either went public or were acquired. One of them was Keyhole Inc. Other alumni companies include encryption software developer Decru, acquired by Network Appliance in 2005; business intelligence and search outfit Endeca, acquired by Oracle in 2011; 3-D facial recognition software developer A4Vision, acquired by BioScript in 2007; 3-D design software developer @Last Software, acquired by Google in 2006; data normalization technology developer Initiate Systems, acquired by IBM in 2010; etc. etc.

And some of the brightest minds walk through the revolving door between the IC and the tech sector. So the New York Times reported that Max Kelly, at the time Facebook’s chief security officer, “who was responsible for protecting the personal information of Facebook’s more than one billion users from outside attacks,” left in 2010 to join the NSA.

Companies work hand in glove with the IC. It’s big business – and for many executives and others involved, it has an aura of patriotism. For startups, it’s an enormous resource and a lifeline. Their business is Big Data, an asset class that contains every bit of personal information that you either eagerly or unwittingly handed over to corporate America and to companies around the world, including that app maker in Russia. Big Data is getting more effective, more universal, and more omniscient.

Snowden’s media blitz has shown the world that some of this data that corporate surveillance collects, analyzes, sells, or monetizes in other ways is also shared with government agencies ostensibly to catch some bad guys, but maybe also for undisclosed purposes. The only way to totally protect yourself from this data flow is to become a hermit cut off from modern life, and even then it might not be possible.

About author

Wolf Richter an entrepreneur based in San Francisco with over twenty years of C-level operations experience, including turnarounds and start-ups. Among other degrees, Wolf earned an MBA from the University of Texas at Austin. He airs his often cynical or tongue-in-check economic, financial, and business observations on his website, Testosterone Pit,“where the truth comes home to roost....more ...more

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